July 26, 2008

New Owners of Airo Die Expect to Create Jobs

By Joe Napsha, The Pittsburgh Tribune-Review

Jul. 26--Airo Die Casting Co. in Derry, Westmoreland County, which makes aluminum parts for Harley-Davidson Inc. motorcycles, has new owners who expect to increase its business and add jobs.

"We are a significant player in the industry," said Scott Bull, chief executive of Pace Industries Inc. of Fayetteville, Ark., parent company of what is now the Pace Industries Airo Division. Pace said it is the largest privately owned custom nonautomotive die-casting company in North America.

Pace Industries last week acquired the Airo Die operations when it bought Leggett & Platt Inc.'s aluminum die-casting business unit, which had 2007 sales of $480 million. Bull is optimistic business can be increased by 6 percent to 8 percent next year, despite the slow economy.

A group of managers in Leggett & Platt's aluminum operations joined with Kenner & Co. Inc., a New York private equity firm, to buy the business for $300 million in cash, preferred stock worth $25 million and a $25 million loan, Bull said. Kenner & Co. owned Pace Industries and the two Airo Die plants in Loyalhanna, Derry Township, before selling it in 1996 to Leggett & Platt.

The Airo Division is part of Pace's network of 19 plants in the United States and Mexico that make aluminum parts and finishes them for customers like Harley-Davidson. The company has 3,500 workers.

Even before the sale, the local operation was expanding, said Daniel Krinock, president of Airo Division. It has about 300 local employees, almost double of five years ago, he said. Airo Division has added 12 workers in the past few weeks, and Krinock anticipates more hiring.

The owners invested about $40 million in the plant to make it a highly automated operation, Krinock said. "In most cases, we're the test site for new work," he said.

As it looks to expand, Pace is challenged by the rising price of the scrap aluminum it uses to make parts, Bull said. It has been able to pass most of that cost onto customers, but they have bulked paying for increases in energy costs, such as natural gas, which the company uses to melt the 200 million pounds of aluminum scrap it buys every year, he said.

Pace is benefiting from the weak dollar, rising labor costs in foreign countries, and, in a twist, the higher cost of shipping products. Those factors are making domestic operations more competitive with foreign manufacturers, Bull said. The weak dollar makes foreign goods more expensive in the United States, because of the higher cost to transport those goods, he noted.

"We have companies today that are bringing jobs to the U.S.," Bull said.


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